DOUG CLARK: We always thought that the benefits of introducing competition in clearing and settlements really had to be made out so that they clearly exceed the costs to our members in introducing it.

SUE LANNIN: How important is clearing and settling? Just for the layperson, we're talking about the basic buying and selling transactions, the finalising of the trade.

DOUG CLARK: It's the legal settlement. It's the exchange of securities for money, making sure that the parties, the central counterparty that exchanges the money and guarantees the transaction is completed, has the wherewithal and the technology to ensure that all transactions are settled and everyone gets their money and buyers get their shares.

SUE LANNIN: Now would competition in clearing and settlement of trades, would that lower costs for investors?

DOUG CLARK: Well I suppose that's what we're still exploring. It's interesting in the Council of Financial Regulators report today they quote some figures from Europe where most of the competition in clearing and settlement has occurred. They quote some figures to the effect that the clearing and settlement costs have been reduced by about 30 per cent.

That's significant costs. That's the costs that the stockbrokers pay the central counterparties for the clearing and settlement of transactions. If that that was going to happen in Australia then you'd have to look very strongly at permitting that. But we're not sure if that would happen here.

SUE LANNIN: The European market is much bigger than the Australian market, so while costs may have come down in Europe would the same thing happen in Australia given it's a much smaller market?

DOUG CLARK: It's true that our market overall is much smaller than the total number of markets in Europe, and there's all those different countries, you know, France, Germany and the rest.

So, big volumes, big potential cost savings. We've had competition in the trading area in Australia now since 2011, since the advent of Chi-X in ASX listed stocks. And even in the lead up to the launch of Chi-X we saw trading fees charged to stockbrokers by ASX come down considerably.

We're not sure there's no competition in clearing and settlements. We're not sure what competition - what effect it would have on pricing. But I suppose it's reasonable to assume that those costs would come down.

But there's also other costs to take into account, like the systems changes - the IT systems, other processes and procedures that need to be implemented.

SUE LANNIN: Now is there a risk that competition in clearing and settlement could undermine the financial system, because you need a company that is financially stable to do it?

DOUG CLARK: Well that's right. The whole idea of a central counterparty is that you have someone strong standing between the buyer and the seller guaranteeing that the transaction succeeds. It's not about me buying shares from you and you relying on me paying money, and me relying on you having the shares to deliver - the central counterparty is someone big and strong and financially stable that makes sure that this must happen.

SUE LANNIN: Now is this the right time, given that investor confidence is weak, is this the right time to introduce competition in clearing and settlement in Australia?

DOUG CLARK: We have expressed concerns - that things have improved a lot the last six months, the market almost through 5,000 today, things have picked up. But that can be fairly brittle. all we need's another shock from overseas or domestically. So we don't want in introducing a new clearing facility, we don't want to do anything that might upset the sentiment of the market.